Glossary
503(b)(9) Claim
A 503(b)(9) claim is a bankruptcy administrative expense claim for the value of goods a debtor received in the ordinary course of business within 20 days before it filed bankruptcy.
Section 503(b)(9) of the Bankruptcy Code gives suppliers of goods a valuable advantage. Normally, a supplier owed money when a customer files bankruptcy holds a general unsecured claim, which is often paid at a small fraction or not at all. But for goods the debtor received within 20 days before the petition date, sold to it in the ordinary course of its business, the supplier is entitled to an administrative expense claim. Administrative claims are paid ahead of general unsecured claims, and in chapter 11 they generally must be paid in full for a plan to be confirmed, unless the claimant agrees otherwise.
The claim has limits. It covers goods, not services, so a pure service provider does not qualify. Courts have split on how to treat items like electricity and mixed goods-and-services contracts. The key date is when the debtor received the goods, not when they were ordered or invoiced. The claim amount is the value of the goods, typically the invoice price. Procedures for asserting the claim vary by court; some courts require a separate motion or request, while others allow it to be asserted on the proof of claim form or set a special deadline. Creditors should read the court's orders in the case.
Here is a fictional example. A produce wholesaler, Golden Acre Farms, ships to a grocery chain several times a week. The chain files chapter 11 on June 21. Golden Acre's records show $22,400 of produce delivered and received between June 1 and June 20, and another $31,000 delivered earlier in May. Golden Acre asserts a $22,400 503(b)(9) claim and a $31,000 general unsecured claim, using delivery receipts to prove the receipt dates.
The 503(b)(9) claim matters to suppliers because it can be the difference between a token recovery and full payment for recent shipments. Keeping accurate proof of delivery dates is what makes the claim possible.
Example
Golden Acre Farms delivered $22,400 of produce in the 20 days before the buyer's chapter 11 filing. It asserts that amount as a 503(b)(9) claim and the rest as unsecured.